Beneficial microbial associations enhance the fitness of most living organisms, and wood-feeding insects offer some of the most striking examples of this. Odontotaenius disjunctus is a wood-feeding beetle that possesses a digestive tract with four main compartments, each of which contains well-differentiated microbial populations, suggesting that anatomical properties and separation of these compartments may enhance energy extraction from woody biomass. Here, using integrated chemical analyses, we demonstrate that lignocellulose deconstruction and fermentation occur sequentially across compartments, and that selection for microbial groups and their metabolic pathways is facilitated by gut anatomical features. Metaproteogenomics showed that higher oxygen concentration in the midgut drives lignocellulose depolymerization, while a thicker gut wall in the anterior hindgut reduces oxygen diffusion and favours hydrogen accumulation, facilitating fermentation, homoacetogenesis and nitrogen fixation. We demonstrate that depolymerization continues in the posterior hindgut, and that the beetle excretes an energy- and nutrient-rich product on which its offspring subsist and develop. Our results show that the establishment of beneficial microbial partners within a host requires both the acquisition of the microorganisms and the formation of specific habitats within the host to promote key microbial metabolic functions. Together, gut anatomical properties and microbial functional assembly enable lignocellulose deconstruction and colony subsistence on an extremely nutrient-poor diet.